Gary Gensler’s Case Against Uniswap: Does the SEC Even Stand a Chance?

D I is not within the scope of the SEC. And that's why I think in this case with UNIS swap, if they file this action, they will lose Unis swap labs, put out a decentralized software protocol that simply does the same thing, right? Technical infrastructure. It provides the apparatus for users to direct their own transactions. Heads up everyone. In the next few weeks, we're launching a new show on the unchained channel called bits and bits exploring how crypto and macro collide one basis point at a time. As you can guess it's a show all about crypto and Marco topics and where they intersect. We've started with some trial runs and they've been going so well. We decided to tease a few moments in this podcast. In this first clip, the Bits and Bits hosts James Sert Ram. Aalia and Alex Kruger discuss Sam Pinkman Fried's 25 year sentence. I don't know. I 2030 30 would have felt right to me. I think, I mean, his life is pretty much over uh 30 years from now. Um Now, I don't know exactly what that entails, but yeah, I, I'll take a little bit of the side play. The uh the devil's advocate point of view here, the average age of a new entrepreneur is 45. So add 20 years to his current age of 50 we might see a second act. Oh, he'll be back, he'll be back, he'll be back. He'll, he'll launch a new business. A lot of people will. A lot of people still already like him. Even with the way things are. Look at Wolf of Wall Street, that guy became an influence, right? He's an influencer. A very large one. Hi, everyone. Welcome to unchained. You're no hype resource for all things crypto. I'm your host, Laura Shin, author of the Crypt Toian. I started covering crypto eight years ago and as a senior editor at Forbes was the first mainstream media reporter to cover Cryptocurrency full time. This is the April 12th, 2024 episode of unchained. Polka dot is the original and leading layer zero Blockchain with over 2000 plus developers. And the polka 0.2 0.0 upgrade will be a massive accelerator for the ecosystem. Join the community at polka dot dot network slash ecosystem slash community with I trust capital. You can buy and sell crypto in a tax advantage. Retirement account, enjoy significant tax advantages. 24 7 access and the industry's lowest fees. Today's guest is Amanda Tuminelli, chief Legal Officer at the DFI Education Fund. Welcome, Amanda. Thank you for having me on Wednesday. The SEC issued a wells notice to Unis Wap labs, creators of the Unis a decentralized Exchange and Wells notice is a sign that the SEC will likely give an enforcement action to Unis Labs. What do you think that this weals notice is likely about? Sure. So of course, I'm speculating here. I have no actual inside information. But if I had to guess, I would assume that the wells notice is going to take a kitchen sink approach, meaning that they will say that the Unis labs products generally violate the securities laws. And we saw them do something similar with the Coinbase. Wells. Coinbase made it available publicly that they received a wells notice in March of 2022. And then they made the response available as well. And what they did there was tell Coinbase that prime the staking service um and wallet violated the securities laws without even naming what digital assets they were taking the position or securities. So I think it's likely that, well, that something high level and broad like that is what happened here. So the sec or more specifically, the chair Gary Unser has suggested in the past that all crypto tokens aside from Bitcoin are securities, various courts have said that tokens in and of themselves are not securities, um similar to the way that the Orange Groves from the famous Howie case, which forms securities law are not in and of themselves securities. So, um, how do you think the agency will try to show that all tokens aside from Bitcoin are securities or have they shown anything legally so far about how they're determining that? So, in terms of the wells, I don't know that they actually need to take the position that all of the assets that are available for treating. And the Unisoft Protocol are securities. They can, they will take the position that they can show that just one or two of them are securities. But I think that we will see something similar to the stance that they take, assuming that a complaint gets filed by the way, that is not necessarily a foregone conclusion. But if they do file a complaint, I think we'll see something similar to what we've seen in the major centralized exchange cases where they argue that secondary market sales of tokens still count as securities transactions because of this ecosystem theory that a token plus an ecosystem equals the conclusion that there is an investment contract at issue. Ok. And so describe that a little bit more, um a token plus an ecosystem, you know, how does that compare to the normal factors that we see uh when looking at kind of the, how we test? Yeah. So I think that we've seen this in the Coinbase oral argument, uh drawn out uh extensively by the line attorney that was arguing that in that in front of Judge Bayla. Um But in the, according to that argument, the sec is saying that because a token is connected in some way according to them, to this ecosystem, to developers who are still working on the code related to the token, to people who are talking about the token and tweeting about it and talking about it on social media, all of that together somehow according to them constitutes a common enterprise. And that the value of the token going up is connected to the efforts of the token creator or the developers working in the ecosystem. I think this theory is wrong. I think that it has no limit principle and would then therefore make all collectibles. Um You know, the Beanie babies argument that people have been talking about recently. Um I think that it would make beanie babies and other collectibles a security in and of themselves if you were to take that argument to its logical ends, but it does seem to be more prevalent uh in recent sec enforcement actions. And so if this wells notice is issued, then um what would be the next steps at that point? Yeah. So on Wednesday, the SEC, according to Unis Wap, the SEC uh told labs that they were going to recommend a lawsuit. That's basically what a Wells is now Unis swap labs will get some amount of time to respond. That could be two weeks, it could be 30 days, it's usually pretty quick. Um And then the enforcement division of the SEC will incorporate their own analysis plus the response by, you know, swap labs when they send over their analysis to the commissioners to vote on whether to actually institute the suit and file a complaint. So in coin, just to compare, because I think Coinbase is the best recent public example of this Coinbase received a wells notice. Um I think it was March 20th or 22nd, they responded publicly um in that video and written submission in April and then the enforcement action was filed in June. So I think the SEC uh seems very motivated because they're very aggressive to move quickly here. Um And I think we might be able to expect a similar timeline. Let's actually just talk, you know about another potential angle that the SEC might take. Um I did see that Paul Gray Wall of Coinbase pointed out that there would be an inconsistency between the S ECs position potentially. I mean, obviously, as we've said, we don't know exactly what they would sue over. But um he pointed out that in the ruling on Coinbase, that judge or it's not a ruling. It's um when she, um you know, denied the motion to dismiss, but she said then that uh the Coinbase wallet um is not showing that, you know, Coinbase is acting as a broker and, and he said that it would be inconsistent if the SEC were to say that Unis Wap was doing the same. So can you talk a little bit about that and you know, whether or not you agree and you know how, how that works. I 100% agree. Um I think that the judge Bea's decision on the motion to dismiss while there were other aspects of it that we may not agree with. One aspect that we absolutely agreed with was her decision to dismiss the allegations that Coinbase Act as a broker through its wallet application. And the key reasons that she decided that was because she decided that a wallet software application merely provides the technical infrastructure for a user to complete their own transactions. It does not engage in brokerage activity. It is not routing orders, it is not providing investment advice. It is simply providing price information to users who create their, who um determine the their own transactions and it's non custodial and it's, it's defi and I think that what we could take from that and what we did take from that order was that on its face D I is not within the scope of the SEC. And that's why I think in this case with Unis Wap, if they file this action, they will lose Unis labs, put out a decentralized software protocol that simply does the same thing, right? It is technical infrastructure, it provides the apparatus for users to direct their own transactions. So I think there is a direct analogy to be drawn here and I think that the SEC does not have the facts on their side. Well, so one issue that I did want to ask about is it does seem that in the tornado cash case, the government seemed to argue that the existence of the Torn Token turned this sort of like indirect interest in the success of the Token as well as the dow. Um you know, it, it it took um that interest, you know, of the developers and turn their relationship from one just of mere developer, just something more like an operator of the platform. So do you think that the existence of the unique token could also tie Unis Wap labs to Unis swap protocol in the same way? Um No, I mean, I would be, I would love to talk more about the Roman Storm case generally, but I think what the government does wrong there in that indictment is package together distinct parts of an ecosystem inappropriately. And I think that they package together the protocol, the U I the token, the dow all together and they just call it a service and they think that if they call it a service, then therefore they can say that the service is responsible and the people running the service are responsible for all of these various things. Um And what they get wrong there is making tornado cash founders responsible for third party bad actors conduct here. I think it will be very important for the, if there is a complaint for the court to also pull apart the distinct parts of the Unis swap ecosystem. The protocol is different from labs, it is different from the U I. It is different from the people creating the tokens that are available to trade. Um And the court did that this exact kind of analysis really well in the Risley V Unis a decision, also judge Fela, she um in a private case that was filed against Unis A labs and Hayden Adams did a really good job of describing the distinct components of the ecosystem and what they do independently. And um ultimately held that those, those defendants were not liable for the conduct of third party token creators over whom they had no control. All right. So in a moment, we're going to talk more about this case and um what the D I Education Fund is also up to but first go record from the sponsors to make this show possible. Polka dot is the original and largest layer zero Blockchain with over 2000 plus developers. The anticipated polka 0.2 0.0 upgrade will be a massive accelerator for the ecosystem, upgrading the infrastructure with eight times higher transaction throughput and twice as fast block times tailored core time for the needs of every protocol trust list bridges to multiple chains and revised Toons with a token burn to reduce inflation. Perfect for gamey and defi to build, grow and scale. Get your web. Three ideas to market fast think big build bigger with polka dot join the community at polka dot dot network slash ecosystem slash community. In this second clip from Bits and Bits Ram and James discuss the conflict between DC G and Gemini earn customers as documented in the New York Magazine article. The crypto world has a new villain. Here's another wrinkle to it. So Barry is a trained bankruptcy specialist and so the argument he's making, which is has legitimacy. Um is that in bankruptcy, it's the time of the petition date where you crystallize the claims. And so part of the issue is bankruptcy law isn't designed for crypto. And we saw some of these issues around Mont Gox. So the time of the petition date is the date when a company files for bankruptcy. In this case, Genesis that took place in January in the lows of the bear market. Yep. And that's the issue. But what makes this like such an affront though that makes us offensive is that Genesis and its creditors have agreed on terms that will allow for close to full remuneration. And Berry is pulling this stunt from the bankruptcy code. Uh despite that and the term that people are calling that in the community is the Berry trade. So it's yet another kind of rug pool. Yeah, I, I my two cents, I think uh my after seeing some of this stuff come out, which I'm kind of not surprised by, I guess I wonder if DC G was the one pulling the strings, not letting Gray Scale cut the fee even further. The people at Grayscale, there's a lot of people from the ETF industry, they know that you need to be competitive on fees to maintain your assets. And I'm sure that there was a lot of math that went into it. Like what the revenue would look like. They cut to certain levels and they knew to be competitive longer term, they couldn't leave their fee at 1.5. But I bet you it goes back to the milking Macau comment. I have a, I have a, I have a feeling that DC G was the one pulling the strings there and keeping the fee as high as they did. It's the only cash generating machine that DC G has now, they sold coin desk. Uh they've got more debt and potential claims coming from future settlements and they have cash flow to pay that. So they've got to milk the cow as long as they can back to my conversation with Amanda. So, you know, as we've just been discussing, there's this potential, um you know, uh lawsuit from the SEC to Unis O Labs. There's the Coinbase um lawsuit. Then, um your organization, the D I Education Fund also is embroiled in a legal battle with the SEC. You recently sued the SEC over its airdrop policies. Tell us about your lawsuit and why you chose to bring it. Sure, I'd be happy to. So, just a few weeks ago, we filed a complaint with our co plaintiff, be a Baba is an apparel company that is based in Waco, Texas. They make beautiful duffel bags, handmade um luggage items and they are seeking a court order that their free airdrop of their token Baba Tokens is not a securities transaction and that the tokens themselves are not in contracts. And together we are bringing a claim that directly targets the S ECs rampant regulation by enforcement strategy. We're claiming under the Administrative Procedures Act that the SEC has violated the A P A because they do have a rule specifically a rule that nearly all digital assets or securities and nearly all digital asset transactions or securities transactions. And they have that rule and they refuse to write it down and put it out for public notice and comment where it could be challenged. So that decision to re to regulate by simply enforcing against the industry without disclosing that rule is a violation of the A P A. So that's the basis of our lawsuit, but it really has everything to do with airdrops. Um And we filed that complaint, March 25th. So now we're waiting for a response from the SEC. So, um one question about the co plaintiff Baba, um you know, typically, uh you know, companies that do airdrops are ones that kind of engage in digital assets, but they, um you know, have sort of more like real world assets. But by that, what I mean is, um, they have handcrafted bags and accessories. Um, I guess they're also engaging in NFTS. But can you just talk a little bit about, um, you know, the choice of this particular co plaintiff? Sure. Absolutely. So, yeah, their token that they created was purely for marketing purposes. They wanted to reach a wider audience of customers. So they did this free airdrop of their tokens and the tokens entitle a person who holds 200 to redeem for a discount on one of their, their bags. And it's an exclusive bag only available to token holders. So this was a marketing way for them to reach a wider audience. And I think it actually has applications beyond just crypto because there's a lot of companies that are not considered crypto companies but are using digital assets in their marketing plans. And so you also have talked about how you believe in kind of a proactive counteroffensive um strategy when it comes to the way the industry deals with the SEC. Can you elaborate on what that means? Yeah, absolutely. Um I think that we have been, the industry has been waiting around to find out who's next for a long time. I think that the SEC has been on a crusade to regulate this industry by just filing actions. And I think that it is about time that we go on the offensive which is why we filed our suit. It's why you're seeing a lawsuit by Ledell X, which is a, um, potential exchange, who they, who is seeking a court order, that they're not a securities exchange in the northern district of Texas. That's why Coinbase is fighting back so hard and also filed a petition for rulemaking. I think there's a real groundswell right now in the industry to be proactive instead of merely defensive. And so, and why do you feel that that is the strategy to take right now? Um You know, is this something that you have seen be effective in other industries or obviously when you are suing your own regulator? I mean, obviously it doesn't apply to the DFI Education Fund specifically, but you know, to the likes of Coinbase or others that you might represent then, you know, why, why is that um the chosen strategy? Yeah. So I think what we would like to happen is for Congress to legislate in this area and release something that looks like a market structure bill, right? Not necessarily the market structure bill, but a way that we have clarity over whether digital assets are securities commodities or something else. But we don't expect that to happen anytime soon. We don't think Congress is going to act this year and maybe not even until like late next year. So in the meantime, I think the most efficient way for the industry to get clarity and be able to still operate in the United States is through the courts. So that's why we've turned our attention to the judiciary to try to get that clarity while we wait for Congress to act. And so, um you know, as you mentioned, we probably aren't likely to get legislation anytime soon. But if you were to come up with a wish list for what you'd like to see in that legislation, what would it be? Um Man, I would just like to see them leave some room for D FI developers to actually innovate and keep doing what they're doing so well. I think this goes right back to the Unis Wap labs uh issue. I think that instead of sending Unis Wap labs a wells notice, there should be room for Unis swap labs to keep doing what they're doing, which is providing decentralized software that makes our economic system better, uh more transparent, more fair, more private. Um So if there is going to be legislation, I would like to see room for that uh acknowledgment that technical infrastructure is not the right place to put obligations that are better put on persons and actual entities. So I'd like to see a distinction made between centralized actors and decentralized actors um or decentralized systems, I should say. Um And yeah, I mean, I could, I could definitely go on, but I would like just overall there to be room for this innovation in the United States to continue otherwise it's going to end up overseas for sure. I mean, it already has ended up overseas, but it will continue to flourish more overseas than it will be here. You know, I just wanted to kind of throw in the fact that you did also submit an amicus brief in the US versus storm case. Um The tornado cash case um talk a little bit about what you think are kind of the main aspects of that that are showing that the sec is overstepping or the government generally. Yeah, we were really proud to submit an amicus brief in the storm case. I co-wrote it with one of D EFS board members, Jake Czerwinski. And we make the argument that the government's theory and the indictment is novel and unprecedented and that theory creates a large developer liability window that did not exist before. They're saying that developers who create software on day one can be responsible for bad actors who use their software on day 300 or 1000 even if there is no connection whatsoever between the developer and that bad actor, even if there's no solicitation or engagement. And they do this in the indictment by alleging three different conspiracies. They allege that the founders of tornado Cash conspired, meaning they agreed to commit money laundering to run an unlicensed money transmitter business and also to violate sanctions. Uh We worked together with other uh with trade associations like Coin Center and Blockchain association to make sure that we covered all of those issues. But our amicus focused on money laundering and I epa the sanctions statute. Um because we did a, we did a review of over 100 ie a cases and we could not find a similar case out there in the country, not just in New York, in the country where the government had previously taken the position that a developer could be liable in this way for a third party bad conduct. And we didn't find one in cases where there, when there were two cases where they actually did discuss software. And in those cases, the software developers specifically sought out a sanctioned entity like they marketed it to them, they solicited them, they designed the software and trained them on it. And there is none of that in the tornado cash case. There is no allegation in the indictment that the Roman Storm or Roman Semenov did anything to contact a sanctioned entity or engage with them or even, or even speak to them. It's as if they would just became aware, according to the indictment, they just became aware that the North Koreans were using the protocol. And according to the indictment, they didn't stop it even though the indictment also acknowledges that they had burned the private key to the protocol and could not do anything to stop it. Um So we felt very, felt very passionately about this theory, uh creating a huge amount of liability for developers that does not exist and should not exist based on the law as it stands. So I have noticed um since the news about this wells notice against Unis swap labs has gone out that a lot of people are saying that this, you know, is like at least for crypto the best um company that the SEC could have chosen. So can you talk a little bit about how you think things will go based on the fact that Unis Wap is a first, also widely used so successful and has a huge war chest. Sure. Um I don't know exactly why they think it's the best company for them to choose. But if I had to guess it's probably because Unis Swap labs is a good actor they are working on or they have released a protocol that hundreds of thousands of people use that there is over a billion dollars in trading volume every day that people are building on who have no connection to each other, that it is truly decentralized. Um And of course, they are in a good position to defend any allegations that got thrown their way. Um I think it was very clear from their statements on social media yesterday that they expected this. They are not surprised. Of course, they're disappointed but they are ready to fight. Um And like I said earlier, I think if the SEC brings this case, they will lose. I do not think the facts are on their side. I think that the nature of the Unis Wap protocol, um the nature of even the U I it, they, they simply do not meet the definitions of an exchange, a broker or a dealer under the exchange act. So I do not think that the SEC is going to prevail here. All right. Well, thank you so much for sharing all your thoughts and uh for coming on unchained. Thanks for having me. Don't forget. Next up is the weekly news recap today presented by Unchained contributor Megan Christensen. Stick around for this week in crypto after this short break. Finally, in this clip from the rehearsals for bits and bits, here's James Alex and Rom joking about the meme coin craze. So, Dodge is up about 30% this week and uh it's been, uh it's a widely talked trade on, on crypto circles. Basically, Dodge is right now at 21 cents. It was 16 cents a week ago. And uh although it is up a lot, the, the the trader uh view is that basically once Bitcoin goes into Alton, hes Dodge hint plus. So it would make for Dodge to go all the way up to, to $1. Uh once uh BT C starts going to alter heights once again. And even though this is not financial advice and this is just a view, the, the, the, the thing about these kind of views in cryptos that they're very often self fulfilling because there is no fundamental value. Dods has absolutely no fundamental value. It's the, the me, the father of all memes uh that being said, uh it, it just makes sense for it to start trending as very good distribution. If you, if you look at the the distribution um of holders of dodge, there is, there is like a barely over 1000 addresses that have over a million dollars. Um um which is nothing. Uh Of course, there's a lot of people who hold a lot of Dodge on their exchange accounts, but it, it just makes sense. And, and the way another way to think about it is we often talk about how this this cycle, this crypto cycle is nothing yet unlike the prior one because retail is not yet truly in the way they were in the last cycle. So the view is that once they come back, which eventually they always come back and you can see this once the Coinbase App starts trending and goes into basically top 20 top 10 right now. It must be like top 150 I believe it's in the no, but it went back down. It got to like, like it went to like 40 I mean, it went back down and that was like a month ago. So um once that happens, they turn around, they look at Coinbase and they wanna buy Dodge, they want now they're gonna buy bunk, uh, like that. Quite likely we're gonna have a dog with hat there and they're gonna buy a dog with hat because they just like the dog. Sorry guys, it's, that's how crypto sometimes works. That being said, uh, Dodge, we have Elon Musk behind Dodge as well. He's one of the largest holders. Uh, it's been, there's been talks about Dodge being used as means of payment, uh, tied to Twitter and, uh, beyond all of that, what do you think of this James? I mean, uh Dodge is a commodity. 100% not a security. What about a Dodge ETF there before an E ETF? Did you know you can buy and sell crypto with tax benefits in an individual retirement account? I trust capital makes this possible. But what does this mean when you buy crypto outside an Ira? Like on an exchange, you face taxes on gains. But in an Ira like a Roth Ira gains can be tax free. I trust capital also has some of the lowest fees in the industry and 24 7 accessibility start now and maximize your retirement savings with I trust capital. Thanks for tuning in to the weekly news recap. This week's episode was written by Juan Aronovitz and edited by Michael Bodley and Megan Christensen from unchained. Let's jump right in, in a landmark decision, Terraform Labs and its co founder, Do Quan were found by a jury civilly liable for orchestrating a multibillion dollar fraud on investors. The case initiated by the SEC last year centered around the dramatic collapse of the algorithmic stablecoin Terra US D in May 2022 which erased over $50 billion from the market. The SEC accused Terraform and Kwan of misleading investors through the sale of crypto asset securities including false claims about the Terraform blockchains adoption by a Korean payments company. Chai. The trial of Abraham A V. Eisenberg accused of exploiting mengo markets began with his defense insisting his actions constituted a lawful quote winning and trading strategy not fraud. Eisenberg's lawyer, Sanford Talkin echoed his client's long standing assertion that the $110 million profit derived from mango markets was the result of legitimate decentralized finance trading. Prosecutors however, labeled Eisenberg's maneuvers including alleged artificial inflation of the mango tokens price and self trading as fraudulent at Ain to theft. The case hinges on the interpretation of defi trading rules with Eisenberg's defense highlighting the sector is inherently risky and speculative nature. Despite federal charges of commodities fraud and manipulation, the defense argues that Eisenberg's actions were in line with the speculative ethos of the di fi worlds where traditional financial regulations struggle to find their footing. Former FTX CEO Sam Beman Fried has initiated an appeal against both his conviction and sentencing following his trial's conclusion. Last month, Beckman Fried was sentenced to nearly 25 years in prison by judge Louis Kaplan of the US district court for the southern district of New York after he was found guilty on seven federal criminal counts including fraud. The trial's outcome found that Beman Fred defrauded FCX customers, lenders and investors in what prosecutors have described as quote, likely the largest fraud in the last decade, end quote. Despite his defense claiming that FT X's collapse was due to mismanagement. Kaplan highlighted Beckman Fried's pattern of perjury and conscious wrongdoing the decentralized lending platform margin. Phi operating on the Salana Blockchain has booked a significant withdrawal of over $250 million following the resignation of Ceo Edgar Pavlovski citing disagreements with the platform's internal and external operations. Pavlovski. S departure has sparked a rapid excess of funds with competitor so and enticing margin, fire users through airdrops to transition assets margin. F's total value locked has fallen more than 30% to 6 55 million on Thursday. Pavlovski. S resignation in an ex post was attributed to personal reasons as well as the unresolved operational disagreements. The situation was further complicated by accusations from Solana taking pool Solas which criticized margin for mismanaging blaze rewards tokens here marked for users leading to high end community tensions in response. Soland proposed airdrops to users migrating from margin, fi further accelerating the outflow of funds. Hong Kong is on the brink of launching Asia's first spot. Bitcoin ETF S with approvals expected next week. According to a Reuters report, the move is set to reinstate Hong Kong's appeal as a global crypto hub enhancing its competitive edge on the heels of previous challenges stemming from pandemic era of restrictions. The anticipation builds as the US launch of similar Bitcoin ETF S booked a whopping $12 billion in net inflows with Bitcoin's value surging this year. The initiative is backed by applications from notable asset managers including the Hong Kong Units of China Asset Management and Harvest Fund Management. Tokyo based Metta Planet. Rolled out an audacious plan to prioritize Bitcoin as a chief asset on its corporate balance sheet. Mirroring microstrategy successful Bitcoin investment playbook. The strategy has catapulted met a planet stock by nearly 90% following the disclosure of its intent to invest 1 billion Yen, which is approximately 6.5 million in Bitcoin set to become the cornerstone of the company's treasury. Previously a hotel operator Metta Planet has diversified its business but its venture into the web three consulting space has yet to achieve profitability. The move to invest heavily in Bitcoin is part of a strategic overhaul spearheaded by incoming stakeholders including Nashville's TXO management. The pivot reflects a broader belief in Bitcoin's viability as a hedge against inflation, a macroeconomic stabilizer and a vehicle for long term capital growth. The investment predominantly backed by investors purchasing stock acquisition rights signifies a calculated gamble on Bitcoin's enduring value and liquidity particularly against the backdrop of the Japanese Yen's depreciation and Japan's economic policies, Sushi DAO passed a pretentious proposal to transfer over 40 million in treasury assets to a new vault managed by Sushi labs. Following a community signal vote garnering 62.5% approval. The vote sought to move the structural change forward with an ongoing implementation vote showing a strong leaning towards acceptance. Criticism has arisen within the community, particularly from Sushi Swap compensation committee member, Naim Boab Zi who accused the core development team of manipulating the vote by creating new wallets to increase their influence. This proposal marks the first participation of the sushi gov dot E wallet and governance wielding a substantial voting power that has raised eyebrows. The shift intends to restructure sushi swap's governance, transferring decision making and development responsibilities to sushi labs. It aims to streamline operations, quicken product development and ensure sushi labs exclusivity in receiving future airdrops sparking debate over the centralization of power and the potential sidelining of the Tao's role in governance. Critics argue this could quote, kill the DAO end quote, undermining the decentralized ethos. Sushi swap was built on Solana has been suffering network congestion lately and developers are set to implement a new feature, timely vote credits aimed at accelerating transaction processing speeds. This initiative approved by 98.4% of the community intends to address delays in the validator voting system, reducing network congestion. The TV C mechanism rewards validators with more credits for faster transaction confirmations, counting the existing loophole that allowed validators to gain extra credits by delaying their participation in consensus, the dydx decentralized exchange known for perpetual futures contracts experienced a halt lasting over nine hours due to complications during its version 4.0 upgrade, the stoppage which paused block production for nine hours and 32 minutes was resolved after the development team implemented a fix for the bug discovered in the upgrades code widely supported by the community. The upgrade aims to enhance the protocol with new features and improvements including a governance mechanism to penalize validators for misconduct through mev slashing proposals. Despite the hiccup, dy DX maintained operational stability although some users reported transfer issues during the downtime Eigen layer alongside its data availability service. Eigen officially launched on the Ethereum maid net. Before its launch, the service had attracted $12 billion in deposits. Highlighting its significant anticipation, Einer introduces a novel quote for staking and quote mechanism, allowing Ethereum stakers to lend security validations to other protocols, broadening Ethereum security infrastructure. This move enables a pulled security system where state Ethereum can secure various services. Beyond the original Blockchain I layer's initial release though is more of a beta version with restricted functionalities including limitations on in protocol payments as well as the absence of a slashing mechanism for dishonest validators. And that's all. Thanks so much for joining us today. If you enjoyed this recap, go to unsa crypto.substack.com that is unchanged crypto.substack.com and sign up for a free newsletter so that you can stay up to date with the latest in crypto unchained is produced by Laura Shin with help from Nelson Wang Matt Pilchard, Juanna Rondo, Megan Gavis Shashank and Margaret Kia. Thanks for listening. Unchained is now a part of the Coin Desk podcast network. For the latest in digital assets, check out markets daily, five days a week with host Noel Anderson. Follow the Coin Desk Podcast Network for some of the best shows in crypto.